Broadcom ratcheted down its $121 billion offer for Qualcomm, which recently raised its $47 billion offer for NXP Semiconductors, putting another twist into Broadcom's attempt to become the third largest chip supplier in the world. Broadcom said Wednesday that it is now willing to pay around $116 billion for Qualcomm.
Broadcom is offering $79 per share for Qualcomm, down from $82 per share. The $79 per share offer only returns to the previous level if Qualcomm cannot complete the NXP deal. The company also said that it would still include an $8 billion breakup fee to calm Qualcomm’s nerves about a Broadcom deal being blocked by regulators.
The announcement came a day after Qualcomm offered to pay $54.5 billion instead of $47 billion for NXP. The acquisition has been the subject of skepticism from NXP shareholders and harsh scrutiny from antitrust agencies around the world. Industry analysts viewed the offer as a severe blow to Broadcom's chances to take over Qualcomm.
On Wednesday, Qualcomm said in a statement that “Broadcom’s reduced proposal has made an inadequate offer even worse despite the clear increase in value to Qualcomm stockholders from providing certainty around the NXP acquisition.” Broadcom has previously said that $82 per share was its “best and final” offer.
This is the second time that Broadcom has amended its offer since it originally pledged to pay around $105 billion for Qualcomm, which has been battered in recent years by legal battles with Apple and regulators threatening to hurt licensing business. Hock Tan, Broadcom’s chief executive, has argued that he can smooth out these wrinkles.
Qualcomm’s board unanimously rejected the $105 billion bid. In response, Broadcom sparked a hostile takeover of Qualcomm’s board. Broadcom’s next move was to raise its bid to $121 billion, which was rejected last week after the board of both companies met. If Qualcomm had taken the deal, it would not have been allowed to sweeten the NXP deal.
The advisory firm Institutional Shareholder Services recommended in a recent report that Qualcomm shareholders vote for four of the directors that Broadcom nominated for election at Qualcomm’s investor meeting next month. That would fall short of the number that Broadcom needs to push through a hostile takeover, but it could prompt more negotiation.
Broadcom said in a statement that Qualcomm should have followed the advisory firm's advice. "Instead Qualcomm's board acted against the best interests of its stockholders by unilaterally transferring excessive value to NXP's activist stockholders," the company said.
“Broadcom has refused and continues to refuse to engage with Qualcomm on price,” Qualcomm riposted in its Wednesday statement. Qualcomm has argued that all of Broadcom’s bid ignores the growth potential of markets for 5G wireless technology, the Internet of Things, and automotive – markets that both Qualcomm and NXP are chasing.